Sustained Bear-Run On NGSE Signal That Economy Needs Help

Market Update for July 19, 2018

Nigeria’s stock market after six months of bearish sentiment broke down its last and strongest support level to make another lower lows of 20% from its peak of 45,321.82 at the beginning of the year. This has further confirmed the protracted nature of the current bear situation in the market and reversed all the gains recorded as it nose dived into four trading sessions of back to back losses, trading below its 36,676.15 basis points position attained on June 4, 2018, from where it rebounded before the current pullback. Beyond every doubt, this signals danger, especially as it is happening right in the peak of the Q2 earnings season.
Given that the stock market is a leading indicator of the health and wellbeing of the overall economy. Investdata therefore believes that the continued market decline during this earnings season shows that something is wrong somewhere with the Nigerian economy today. Worthy of note is the fact that politics cannot be separated from the economy.there issues with high cost of funds and dwindling confidence in the whole system, ahead of 2019 elections.
Thursday’s trading session was volatile as the NSE index opened the day on the upside through the mid-morning to midday before pulling back from intraday highs of 36,906.22 to lows of 36,420.72 in the afternoon when sell off ensured in highly capitalized stocks.however, few minutes to the close of trading session there was a slight retracement to close at 36,470.05bps to extended its 4-wave corrective trend.
During the session, Ecobank Transnational Inc. made its impressive Q2 numbers available (READ), just as United Capital Plc, whose numbers however came flat, with Earnings per share of 34 kobo against 33 kobo in the corresponding period of 2017 (READ).
Market technicals for the day were negative despite the improved traded volume in the midst of negative market breadth and sentiments as revealed by Investdata’s Daily Sentiment Report, showing a ‘sell’ pressure of 90% and ‘buy’ position at 10%. Volume index was 0.96 of the day’s total transactions.
The energy behind the day’s market performance betrayed further weakness, as reflected in the money flow index at 24.19 points, a huge drop from previous day’s 35.44points. This is an indication that funds are leaving again in a market that is already lacking liquidity.

Index and Market Cap
At the end of Thursday trading, benchmark index shed 278.13bps, closing at 36,470.05bps, after opening at 36,74818bps, representing a 0.76% decline, just as market capitalization, fell by N100.75bn to close at N13.21tr from an opening value of N13.31tr, also representing 0.76% value loss, to further deepen the red position of investors’ portfolio.
If you haven’t joined Investdata Buy & Sell Signal setup, where you can look over our shoulder and follow to know when to hold cash and take advantage of the watchlist of stocks for different investment purposes that you may position in, as the market oscillate. To register and become a member send Yes or stocks to the phones numbers below. The number of stocks on our watch list has increased due to the prolonged correction. Take advantage of this service to buy right and sell right.
Thursday’s downturn was due to price depreciation in all class of stocks like Nestle, Nigerian Breweries, Zenith Bank, PZ, FBN Holdings, UBA, Aiico, Japual Oil and Cadbury, impacting negatively on the NSE’s Year-to-Date return, dragging it down further to a negative 4.64%. This was just as market capitalization within the period lost N398.18bn, same as 2.93% below the year’s opening value.

Bullish Sector Performance
Sectorial performance indices were largely up except for the NSE Industrial and consumer goods that closed lower, while NSE banking, Insurance and oil were in the green. Market breadth was negative as decliners outnumbered advancers in the ratio of 27:20, to continue four trading sessions of down market.
Market activities were up in volume and value by 63.61% and 196.39% respectively to 296.59m shares worth N4.86bnfrom the previous day’s 181.23m units valued at N1.64bn.
Transaction for the day was boosted by trading in aviation service providers- Medview Air, which announced additional aircrafts to its fleet for international operations and the coming Hajj. Others were: GTBank, Zenith Bank, Transcorp and FBNH that witnessed increased trading to top the activity chart.
The best performing stocks for the session were Wema Bank and Oando that topped the advancers’ table after gaining 9.68% and 9.47% respectively to close at N0.68 and N5.20 each, due to their low price attractions.
On the flip side, Etranzact and Livestock were the worst performing, losing 9.89% and 9.33% respectively to close at N4.10 and N0.68 on market forces and trend.

Market Outlook
we expect more Q2 earnings reports hit the market, with just one full week left before the statutory deadline for the release of unaudited Q2 numbers. If these numbers beat expectation as some have done, the possibility of short term reversal is high, considering the undervalued nature of equities and the high yields. Investors should review their positions in line with investment goals and act as events unfold in the global and domestic environment.
However, we would like to reiterate our advice that investors should go for equities with intrinsic value, especially during this season were Q2 interim dividend payment are expected in the market arena very soon.
We advise investors to allow numbers guide their decisions while repositioning in any stock, especially now that stock prices remain volatile amidst improving company, economic and market fundamental.

Investdata Stock Market Training Workshop

Venue: On Saturday, July 28, 2018, Venue Ostra Hall & Hotel Alausa Ikeja Opposite NNPC Gas Plant

Theme: Comprehensive Stock Trading & Investing Toolkit for Rest of 2018

Sub Topics

Review of 2018H1 Market & Economic Performance: How Fiscal Reforms and Stimulus Will Support the Market/Economy in 2018H2
In this presentation, the speaker will discuss how historically the Fiscal and Monetary policies have influenced Nigeria’s stock market, the implications for the second half and it would drive equity prices higher as recovery continues, impact of the new NSE market Structure.

2018H2 Trading Checklist: How to Find Winning Stocks in Nigeria’s Volatile Equity Market
After the prolonged correction, volatility is here to stay for the rest of 2018. Is it time to start worrying about losses suffered so far, a flattening yield curve or time to relax due to the outstanding earnings season? Better yet, is there a way to harness increased volatility to your advantage? Our facilitator, a stock market expert will show you how to handle increased volatility in 2018. He’ll offer insights into forces impacting today’s market. He will share, using real-time examples, his ultimate checklist to finding winning stocks propelled by volatility. This simple strategy allows you to quickly evaluate stocks and to better time entry and exit points, while understanding market forces moving your portfolio.

How To Generate Consistent Superior Equity Returns and Income With Dividend Stocks
Here, the expert will discuss his approach to generating equity income by investing in undervalued dividend stocks, what he looks out for when trading dividend stocks at a discount to historical valuations on multiples of price to sales, earnings, cash flow, book value, and enterprise value to EBITDA. In addition, he requires companies to have positive operating cash flow over the past 12 months, with dividends covered comfortably by cash flow.

Powerful Patterns and Effective Strategies for Trading Shifts in Market Volatility
Recent and ongoing changes in market volatility present both risks and opportunities for discerning traders. Learn some of the most effective strategies for taking advantage of the high-probability trading opportunities available in equities, while minimizing risks associated with stock market trading. The six most powerful patterns in the market to trade, how to know which patterns and strategies to specialize in for consistent results and the critical difference between oscillating and momentum patterns.

Kindly call or send yes to 08032055467, 08028164086 or 08111811223.

Ambrose Omordion
CRO|Investdata Consulting Ltd

Tel: 08028164085, 08032055467

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